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please, i need help with these question, i have the answers but tell me how ??
1-A business operates a job costing system and has aim of making profit of 30% of sales
cost estimates for 1 particular job are:
D.M : 80 KG at 5$/kg
D.L : 40 H at 6$/ h
total overheads are budgeted at 120000$ and are absorbed on basis labour hours, budgeted labour hours are 50000 .
what should be the price qouted for the job ? (1051)2-An investment division earns a return on investment 15% and RI 200000, the cost of capital 18% a return on capital employed of 16%
what are the effects on the ROI and RI ?3-budgeted production next month is 8200 units. each unit requires 6 h to make and labor is paid at 15$/h and idle time is 10% of the total time paid.. what is the total budgeted labor cost for the month?
4-two investments are available: -P offers interest of 5% / year compounded half-yearly for a period of 4 years
-Q offers one interest payment of 18% at the end of 4 years of it’s 4 years life
what is the annual effective interest rate offered by each of the 2 invesments1 Materials are 400; labour is 240; overheads are ($120000/50000) x 40 = 96
So total cost is 736. Profit is 30% of sales, so cost is 70% x sales.
So sales = 736/70% = $10512 I think you have missed out part of the question – it does not make sense as it is written (I would assume that they are considering a new investment, but it does not say so)
3 They need to work 8,200 x 6 hours = 49200 hours.
If they are idle 10% of the time, then for every 100 hours, they are only working 90 hours (or for every 90 hours they work, we need to pay for 100 hours).
So we need to pay for 49200 x 100/90 hours.
So the total cost will be 49200 x 100/90 x $15 = $320,000P: it is 2.5% every half year, so if R is yearly rate then (1+R) = 1.025^2 = 1.050625
So yearly rate is 5.0625%Q: Again, if R is yearly rate, then 1.18 = (1+R)^4
So R = 0.422 or 4.22%Question number 1 got it
here is #2
2-An investment division earns a return on investment 15% and RI 200000, the cost of capital 18% . A new product give a capital employed of 16%.
what are the effects on the ROI and RI ?#3 there is something i am not getting, first u said total cost will be 49200 x 100/90 x $15 = $320,000 actually 320 is not the number i am getting on my calculator. i understood that the time without Idle the Working productive hours is 6 and we will add the Idle time on it after we multiply 2800*6 = 49200 .. so total cost should be Equivalent to 820,000 $ ??
with #4 i got P so it’s half yearly and and interest / year is 5% so 2.5% 6 months at a time
but Q sorry but i am not getting how we got the .422 ?thanks in advance,
2) You have still mistyped it. You must mean that the new product gives a return on capital employed of 16%.
Assuming that, since the product gives more than the current ROI of 15%, the ROI will increase.
Since the product gives less that the cost of capital, the RI will fall.3) Sorry, I hit the wrong key – it comes to $820,000 (not 320,000). My workings were correct – I just mistyped the final answer.
4) If it is R per year, then to get the total owing after 4 years you would multiply by (1+R)^4 (the ^4 because it is 4 years).
If they simply added on 18% at the end of four year, then the total owing after 4 years must be multiplying by 1.18.
We just need to make the two equal.
hi sir
Please about the example 3, about idle, I keep getting $820,000
I don’t understand.You did not read my previous reply!
Read point 3 in my last post again!!!
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